Mark Edelstein and Theresa Foudy authored an article for The Real Estate Finance Journal that examines a recent decision by the U.S. Court of Appeals for the Second Circuit that they believe potentially raises troubling roadblocks to a lender's ability to foreclose upon real property in New York.
"Going forward, if a tenant of a property is in a bankruptcy proceeding prior to the filing of a foreclosure action, or files for bankruptcy during the pendency of the foreclosure action, a lender seeking to foreclose will need to either: (i) forgo naming the tenant - or dismiss an already-named tenant - and accept that the lease will remain unaffected by the foreclosure, or (ii) seek relief from the automatic stay from the bankruptcy court," the authors wrote. "However, neither of these options ensures that the foreclosure action will be able to proceed."
Read the full article.